Fashion house Tapestry missed quarterly revenue estimates amid continued weakness at the Kate Spade accessories brand it acquired in 2017.

Chief Executive Officer Jide Zeitlin said he would review the Kate Spade business after Tapestry reported that global same-store sales for the brand fell 16% in the first quarter and said it expected sales to drop in the high-single digits in the current quarter.

“Kate Spade’s comparable store sales declined in line with expectations, reflecting the product and merchandising challenges we’ve previously identified,” he said in a news release.

Jessica Ramirez, a retail analyst at Jane Hali & Associates, said Kate Spade’s new handbag designs haven’t caught on. “Kate Spade doesn’t know who its customer is anymore,” she told Reuters. “I can’t say that the product isn’t nice, but I don’t know who would wear it.”

Tapestry’s overall sales declined 2% to $1.358 billion even though sales at its flagship Coach brand rose 1% to $966 million, reflecting improved sales in China and Europe. Analysts had expected revenue of $1.371 billion.

The company posted adjusted earnings of 40 cents per share, beating estimates of 37 cents per share. “Our business internationally was stronger than in North America where we managed continued industry headwinds,” Zeitlin said.

When he replaced Victor Luis as CEO in September, Zeitlin said one of his primary initiatives would be to work on “core growth drivers,” including Kate Spade. According to CNBC, Tapestry “has been hurt because its brands including Kate Spade are readily available at off-price shops, thus discouraging consumers to buy those goods at full price.”

Kate Spade sales contracted 6% year-over-year to $306 million in the first quarter due in part to lackluster e-commerce performance. At Stuart Weitzman, sales fell 9% dip to $87 million, which Tapestry attributed to softer wholesale demand and continued operational challenges.

“My time as CEO has deepened my conviction that our three brands have powerful equities that connect meaningfully with significant and distinct consumer segments globally and together form a foundation for growth,” Zeitlin said.

Drew Angerer/Getty Images

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